Stock investors no longer have doubts about dividends, and that’s reason for some doubt.
Shares of high-quality, cash-rich, large-cap companies that yield more than the Standard & Poor’s 500-stock index SPX -0.16% are the new favorites in many portfolios. But many of these success stories have been discovered, boosting share prices and trimming yields.
At this point, investors might do better scouring the S&P 500 for companies that wouldn’t show up on a screen for above-average yielders, but which still enjoy dominant, “wide moat” positions in their business.
“It’s kind of a crowded trade,” said Paul Nolte, managing director at investment firm Dearborn Partners, about the popularity of the high-quality dividend strategy. “Valuations on high-dividend payers are at the upper-end of their historical ranges.” Read more.....